Ireland: The Dawn Of A New Era For The Irish Funds Industry

Since the establishment of the International Financial Services Centre in Ireland in 1988, Ireland has become a domicile of choice for asset managers seeking to establish regulated funds for distribution worldwide.

Over 430 global fund promoters have used Ireland as a fund domicile in order to establish regulated funds. As of 31 December 2013, there were 5,599 Irish domiciled funds with assets of approximately EUR1.344trn1. Such funds are regulated by the Central Bank of Ireland (the "Central Bank"), which is the competent authority with responsibility for the authorisation and supervision of funds established in Ireland.

In addition, in recent years Ireland has been the fastest growing international fund administration centre. As of 31 December 2013, Irish administrators serviced 12,889 Irish and non-Irish domiciled funds with assets under administration in excess of EUR2.7trn2. Ireland is also the largest hedge fund administration centre in the world with over 43% of global hedge fund assets serviced in Ireland3.

The setting of the first ICAV seeds

The Irish Government acknowledged in 2011 in its Strategy for the International Financial Services Industry 2011-20164 that despite the success of the Irish funds industry, there were challenges that needed to be addressed. One of the challenges identified was product competitiveness.

Although Irish domiciled funds may be structured in many legal forms, depending on whether they are structured as UCITS funds or non-UCITS funds ("AIFs") (e.g. common contractual funds, unit trusts, variable capital companies or investment limited partnerships), it was noticeable that Ireland as a leading international fund domicile did not offer a corporate fund structure similar to the SICAV in other EU jurisdictions.

In this regard, the Government undertook in its 2011 strategy paper to introduce a legal framework for a corporate fund structure which is a not a company required to be incorporated under the Irish Companies Acts. Currently Irish domiciled funds structured as companies (such as variable capital companies) are incorporated under the Irish Companies Acts and are consequently established as public limited companies which are distinguishable by the words "public limited company" or "Plc" appearing at the end of the name of the company.

ICAV – the beginning

In keeping with the Irish Government's commitment, the Irish Minister for Finance, Michael Noonan, published on the 20th December 2013 the General Scheme of the Irish Collective Asset-management Vehicle (ICAV) Bill ("General Scheme of the ICAV Bill"), which provides for a new corporate fund structure to be known as the Irish Collective Asset-management Vehicle or "ICAV". On the publication of the General Scheme of the ICAV Bill, the Minister of Finance commented: "This is a significant milestone in delivering a new corporate vehicle for investment funds which will be more suited to the needs of the global funds industry. The ICAV will help the Irish funds industry to compete for new sources of business. I intend to push ahead with the drafting of the Bill as a matter of priority."

The rationale

The principal rationale for introducing a legal framework, to facilitate fund promoters / asset managers who wish to establish an Irish regulated ICAV, is to enhance Ireland's competitiveness. However it is acknowledged that such enhancement will only be realised if the ICAV presents tangible benefits to global fund promoters / asset managers. In this regard, the following benefits are notable:

  • The ICAV will not be required to be incorporated as a public limited company under the Irish Companies Acts 1963-2013 and therefore will not be subject to the full rigours of the Companies Acts which are quite comprehensive and more applicable to Irish trading companies than Irish funds. It is expected that this will result in reduced administrative obligations and costs for the ICAV; and
  • It is intended that the ICAV will be structured so that it can "check-the-box" to be treated as a partnership or disregarded entity for US federal tax purposes and therefore will facilitate investment by US taxable investors and/or US taxable and tax-exempt investors in a master feeder fund structure. This is distinct from the treatment of Irish corporate funds incorporated as public limited companies under the Irish Companies Acts ("Corporate Fund PLCs") which cannot check-the-box to be a flow-through for US tax purposes. Further information on this is set out below.

Features of the ICAV5

It is envisaged that the ICAV will have some common features with Corporate Fund PLCs:

  • Authorisation and supervision by the Central Bank;
  • Establishment as a UCITS fund or an AIF;
  • If established as an AIF, it may be structured as open-ended, closed ended or with limited liquidity;
  • Possible establishment as an umbrella fund with segregated liability between subfunds;
  • Multiple share classes;
  • The assets of the ICAV must be entrusted to a depositary;
  • The paid up share capital of the ICAV must be equal to the net asset value of the ICAV;
  • Registered office in Ireland;
  • Board of directors and a minimum of two directors;
  • A secretary must be appointed;
  • The name of the ICAV must be approved by the Registrar of Companies;
  • Minimum of two shareholders;
  • Shareholders' liability under the Instrument of Incorporation will be limited to the amount unpaid on their shares;
  • Annual accounts in accordance with accounting standards must be published;
  • The ICAV will be subject to the same attractive Irish tax regime that currently applies to the Corporate Fund PLC i.e. no Irish tax at the fund level, no Irish withholding taxes on distributions where shareholders are not Irish resident or ordinarily resident in Ireland and an attractive indirect tax regime whereby many services provided to a fund are VAT exempt and the issue, redemption or transfer of shares are not subject to any transfer taxes. It is expected that the ICAV (like the Corporate Fund PLC) should have the same access to many of Ireland's double taxation agreements (Ireland has signed comprehensive double taxation agreements with 70 countries, of which 68 are in effect) so as to minimise the possible effect of foreign withholding taxes on returns on its investments.

However it is also envisaged that the ICAV will have features which distinguish it from Corporate Fund PLCs:

  • Incorporation by the filing of certain prescribed documents with the Central Bank (as opposed to the Irish Companies Registration Office which is the registry applicable to Corporate Fund PLCs);
  • Instrument of Incorporation as opposed to a Memorandum and Articles of Association;
  • Amendments to the Instrument of Incorporation without the need for proposed amendments to be sanctioned by the shareholders provided that the depositary of the ICAV certifies that the proposed amendments will not prejudice the interests of the shareholders;
  • Shares and/or debentures (i.e. bonds, debt securities, etc) may be issued. This contrasts with Corporate Fund PLCs structured as AIFs marketing to qualifying investors which may only issue debt securities on a private basis to a lending institution to facilitate financing arrangements;
  • The requirement to hold an AGM may be avoided by giving at least sixty days' written notice to all of the ICAV's shareholders;
  • Financial statements may be published on a sub-fund by sub-fund basis in the case of an umbrella ICAV. Currently Irish company law requires the accounts of all sub-funds of an umbrella Corporate Fund PLC to be included in the financial statements of that company;
  • More simplified procedure for facilitating schemes of amalgamation, mergers, divisions and other general reorganisations;
  • No statutory requirement to diversify investment risk. The Irish Companies Act 1990, as amended currently provides, based on EU company law requirements, that a variable capital company must have the aim of spreading investment risk which may be problematic where a fund is seeking exposure to a single issuer or counterparty. This latter requirement will not apply to the ICAV.

In addition to the above features, existing Corporate Fund PLCs will be able to convert additional option as to what legal entity they wish to use when establishing a fund which may have US taxable investors.

Where fund promoters wish to establish a master/feeder fund structure to accommodate both US taxable and US tax-exempt investors, the introduction of the ICAV should provide the option for the master fund to be formed as an ICAV as opposed to a unit trust or investment limited partnership. The feeder fund (for US tax-exempt investors and non- US investors) will be able to be formed as an ICAV, Corporate Fund PLC, unit trust or investment limited partnership as all 4 types of legal entities should be able to be treated as a corporate entity for US tax purposes.

Next steps

Having received feedback on the General Scheme of the ICAV Bill from stakeholders including inter alia the Central Bank, Office of the Director of Corporate Enforcement and the Irish funds industry, the Irish Department of Finance has instructed the parliamentary counsel to draft the full text of the ICAV Bill. Once the ICAV Bill is published, it will be reviewed by the Houses of the Irish Parliament before being enacted into Irish law.

Although there is no prescribed timeframe, it is expected that the applicable legislation will be enacted before the end of 2014 as a result of the priority given to the legislation by the Irish Government to date and the input by relevant stakeholders in the process to date.






5. Although the principal features of the ICAV are not expected to change given the commitment of the Irish Government and the level of input to date by relevant stakeholders, it should be noted that, as part of the legislative process, a number of reviews will take place by both Houses of the Irish Parliament once the ICAV Bill is published which may result in amendments.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions